Gold Continues To Drift Lower Ahead Of Important Data

(Kitco News) - Gold prices are again modestly down and hovering near a three-week low in early U.S. trading Wednesday. The sellers have gained some momentum recently amid a lack of fresh, bullish news to support the safe-haven metal. There are important economic and political developments that lie just ahead, however. June Comex gold was last down $1.80 an ounce at $1,255.30. July Comex silver was last down $0.049 at $16.72 an ounce.

The U.S. ADP national employment report was just released at it showed a rise of 177,000 in April. That is just below market expectations and had little impact on the precious metals markets.

The markets’ data-point highlights of the week are the Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday and ends Wednesday afternoon with a statement, and Friday morning’s U.S. jobs report from the Labor Department. No change in U.S. monetary policy is expected at this week’s FOMC meeting. However, as usual, the wording of the FOMC statement released early Wednesday afternoon will be parsed for any clues on future U.S. monetary policy moves. The key non-farm payrolls number in Friday’s U.S. jobs report is forecast to come in at up around 190,000.

Traders and investors are also looking ahead to this weekend’s French presidential elections. A surprise win by the right-wing candidate Marine Le Pen would likely roil many stock and financial markets. Market watchers remember that Donald Trump was not expected to win the U.S. presidential election, either.

The key outside markets on Wednesday morning see the U.S. dollar index trading slightly higher. The greenback bears still have the overall near-term technical advantage. Meantime, Nymex crude oil prices are slightly higher but the bears have the near-term technical advantage as prices hit a 5.5-month low on Tuesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, and the ISM non-manufacturing report on business.

(Note: Follow me on Twitter--@jimwyckoff--for breaking market news.)

Technically, June gold futures bulls and bears are on a level overall near-term technical playing field. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,241.50. First resistance is seen at $1,260.00 and then at this week’s high of $1,272.40. First support is seen at $1,250.00 and then at $1,241.50. Wyckoff’s Market Rating: 5.0

July silver bears have the firm overall near-term technical advantage as prices hit a 3.5-month low overnight. The next upside price breakout objective is closing futures prices above solid technical resistance at $17.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.00. First resistance is seen at $17.00 and then at this week’s high of $17.29. Next support is seen at $16.50 and then at $16.25. Wyckoff's Market Rating: 3.0.